Developer's indictment shouldn't impact county's litigation

By John HarbinTimes-News Staff Writer

Published: Wednesday, April 11, 2012 at 7:45 p.m.

Last Modified: Wednesday, April 11, 2012 at 7:45 p.m.

Seven Falls developer Keith Vinson's federal indictment will probably not affect Henderson County's fight to get $6 million officials say they are owed because work was not completed at the development.

Vinson, 53, and four others are accused in a scheme to fraudulently obtain bank loans to finance the stalled Seven Falls Golf and River Club in Etowah. Seven Falls was a planned high-end golf course development to be built on 1,400 acres that ended up in bankruptcy court in 2009.

Henderson County is currently involved in litigation to recover about $6 million from an improvement guarantee.

"The county requires an improvement guarantee be provided to cover 125 percent of the cost of proposed infrastructure, in case the subdivision isn't finished, or the infrastructure must be completed prior to the sale of any lots," Henderson County Assistant Attorney Sarah Zambon said last week. "This improvement guarantee can take the form of a letter of credit, cash, or — like in this case — a bond."

When a bond is used, Zambon said, the county has to request the money if work hasn't been finished by a deadline on a subdivision.

"The work that needed to be completed, hasn't," she said. "No roads, sewer or infrastructure have been put in."

The county sent a letter to the holder of the bond, Lexon Insurance Co., seeking the $6 million. The bond was supported by a letter of credit by Synovus Bank.

"The bank had some concerns," Zambon said. "The bank filed an interpleader, which basically means they have this $3.2 million in a letter of credit and the bank doesn't want to get sued by giving the money to the wrong party, so they brought a lawsuit to allow the court to decide (who gets the funds)."

In an e-mail Wednesday, Zambon said it's unclear at this point how or if the federal indictments will impact the county's case.

"One key factor is that the county's litigation involves the bonding company, Lexon, and not Mr. Vinson directly and we are seeking our remedy, in the form of the bond payment, from the bond company and not Mr. Vinson at this time," she said.

Zambon added that the property is held in the name of Seven Falls LLC and not Vinson himself. The indictments may impact legal arguments made by Lexon regarding whether Vinson will complete the work, since he is now tied up in federal court, but said that "this is just conjecture at this point."

In addition to the lack of infrastructure at Seven Falls, erosion at the site has raised the concern of local environmentalists and the county. Vinson has been cited multiple times by county officials for violating development standards in place to protect the land. Those citations have resulted in the assessment of $113,944.76 in fines, which have not been paid.

Vinson appeared in court Tuesday for his federal charges and asked for a court-appointed attorney. Judge Dennis Howell said he has found that Vinson is indigent for now, although he wants to review Vinson's paperwork to determine his financial situation after Vinson claimed to own several pieces of property with no value.

The 16-page grand jury indictment details a loan kiting scheme in which multiple straw borrowers were used to obtain money from banks in a scheme that bilked banks out of about $21 million.

<p>Seven Falls developer Keith Vinson's federal indictment will probably not affect Henderson County's fight to get $6 million officials say they are owed because work was not completed at the development. </p><p>Vinson, 53, and four others are accused in a scheme to fraudulently obtain bank loans to finance the stalled Seven Falls Golf and River Club in Etowah. Seven Falls was a planned high-end golf course development to be built on 1,400 acres that ended up in bankruptcy court in 2009.</p><p>Henderson County is currently involved in litigation to recover about $6 million from an improvement guarantee. </p><p>"The county requires an improvement guarantee be provided to cover 125 percent of the cost of proposed infrastructure, in case the subdivision isn't finished, or the infrastructure must be completed prior to the sale of any lots," Henderson County Assistant Attorney Sarah Zambon said last week. "This improvement guarantee can take the form of a letter of credit, cash, or — like in this case — a bond." </p><p>When a bond is used, Zambon said, the county has to request the money if work hasn't been finished by a deadline on a subdivision.</p><p>"The work that needed to be completed, hasn't," she said. "No roads, sewer or infrastructure have been put in."</p><p>The county sent a letter to the holder of the bond, Lexon Insurance Co., seeking the $6 million. The bond was supported by a letter of credit by Synovus Bank. </p><p>"The bank had some concerns," Zambon said. "The bank filed an interpleader, which basically means they have this $3.2 million in a letter of credit and the bank doesn't want to get sued by giving the money to the wrong party, so they brought a lawsuit to allow the court to decide (who gets the funds)."</p><p>In an e-mail Wednesday, Zambon said it's unclear at this point how or if the federal indictments will impact the county's case. </p><p>"One key factor is that the county's litigation involves the bonding company, Lexon, and not Mr. Vinson directly and we are seeking our remedy, in the form of the bond payment, from the bond company and not Mr. Vinson at this time," she said. </p><p>Zambon added that the property is held in the name of Seven Falls LLC and not Vinson himself. The indictments may impact legal arguments made by Lexon regarding whether Vinson will complete the work, since he is now tied up in federal court, but said that "this is just conjecture at this point."</p><p>In addition to the lack of infrastructure at Seven Falls, erosion at the site has raised the concern of local environmentalists and the county. Vinson has been cited multiple times by county officials for violating development standards in place to protect the land. Those citations have resulted in the assessment of $113,944.76 in fines, which have not been paid. </p><p>Vinson appeared in court Tuesday for his federal charges and asked for a court-appointed attorney. Judge Dennis Howell said he has found that Vinson is indigent for now, although he wants to review Vinson's paperwork to determine his financial situation after Vinson claimed to own several pieces of property with no value. </p><p>The 16-page grand jury indictment details a loan kiting scheme in which multiple straw borrowers were used to obtain money from banks in a scheme that bilked banks out of about $21 million.</p><p>Charged with wire fraud conspiracy, misapplication of bank funds and conspiracy to commit money laundering are Avery Ted "Buck" Cashion, III, 58, of Lake Lure; Joan Lusk Cashion, 55, of Lake Lure; Raymond M. "Ray" Chapman, 54, of Brevard; Thomas E. "Ted" Durham Jr., 57, of Fletcher; and Vinson, 53, of Asheville, according to the criminal bill of indictment filed April 4.</p><p>Buck Cashion, Chapman, Durham, and Vinson were also charged with money laundering. Vinson also faces four counts of wire fraud.</p><p>The defendants are scheduled to appear in court again April 25 starting at 9:30 a.m. for an arraignment and to discuss their representation.</p><p>Reach Harbin at 828-694-7881 or john.harbin@blueridgenow.com.</p>